Jon McLeod

Insurance Q+A with Ray Faubion

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Jon McLeod:Welcome to Inside the Markets. We’re here today with Ray Faubion with McGriff Insurance. Ray, why don’t you tell us a little bit about yourself and how you got in the insurance industry?

Ray Faubion:Well, let’s see. My dad was a State Farm agent.He started in Fort Myers in 1961. We moved from Miami. He had the opportunity to open an agency. At that time there was only one agent in all of Lee County, so he was early in on the insurance business.When I … For summers and weekends and so forth, I used to work in his office, so I got really used to it from a young age and decided after I graduated college that I wanted to pursue that career.

JM:Okay. Where did you go to college?

RF:Lakeland. Florida Southern College.

JM:Okay. Excellent. Now, have you been here in Fort Myers your entire life?

RF:Born in Miami but moved over when my dad started that agency in 1961. I was just two.

JM: My kids actually moved down here when they were two, but it wasn’t 1961.

RF:Yeah.

JM:Tell me a little bit about your community involvement. The type of organizations you’re in and so forth.

RF:It’s been several things over the years. That was kind of a motto that our company, our individual company … Well, let me step back. Actually, my parents were involved in different organizations… volunteer organizations, when I was young so I kind of got an early start in that. They led by example. When it started my working career, especially when I went with an independent agency in the late ’90s, that was kind of a motto of the agency. Get involved in the community.Get to know people and that’s probably a good way to build your business.

JM:Okay.

RF:I took that and ran with it. I got involved with Rotary early on. Yep. The YMCA, Bonita Springs assistance office, and a few other organizations that I’ve really enjoyed being involved with over the years and it’s helped build my business, but it’s done the right thing for the community, so it’s a win-win.

JM:What’s your biggest take away or biggest achievement from working with civic organizations like Rotary or the YMCA?

RF:I think it’s the people you meet. You really meet some great people, like yourself, Jon, that wants to be involved-

JM:I did not pay him for that.

RF:… in the community, but people that want to be involved in the community, generally they’re the ones that you look up to in what they do and if you can get to be friends with them and do good things with them, then they end up helping you in your business as well.It goes both ways.

JM: Excellent. So, who would you say inspires you the most?

RF:Probably my parents, first of all, just because of their involvement in the community. They just celebrated their 60th wedding anniversary, so that was a real special thing to be involved with.

JM:Excellent. Congratulations.

RF:Yep. Thank you. After that, it was probably the CEO of the first agency I joined after I left my parents’ State Farm agency, and that was Gary Trippe. Also very involved in the community, he set a good example and I try to follow it.

JM:Now, if I remember correctly, Gary Trippe, with Oswald Trippe, then became BB&T Insurance.

RF:That’s right.

Oswald Trippe was purchased by BB&T Bank and Insurance Company, and McGriff is a re-brand, if you will, so it’s the same company- Yes.

JM:… as BB&T, it’s just a re-brand.

RF:That’s exactly right.

JM:Okay.

RF:No changes. Just new name, new email, new letterhead. Yes.

JM:Excellent. And you just completed that transition a couple months ago.

RF:Yes. It’s very recent. Still getting a lot of questions about it.

JM:I’m sure. I’m sure. It tends to throw people for a loop with a name change.

RF:Right.

JM:After reading a little bit more about why the name change was put in place it makes an awful lot of sense. Talking about the insurance industry here in Southwest Florida, obviously we’ve got some unique challenges here besides the weather, the weather obviously being a big topic of conversation as of late. What are some of the challenges you see or the missteps that you see that people either do on purpose or just don’t completely understand what sort of coverage they need and where they might be leaving themselves open to some liability?

RF:Okay. We call it the country of Florida when it comes to insurance because Florida’s this little stick of land between the Atlantic Ocean and the Gulf of Mexico with the big winds that blow back and forth across. That makes us unique in that respect. What we do in Florida is often much different than what we do in the rest of the country.

RF:You talked about the hurricane. That’s what drives it being called the country of Florida because we have to do things differently because of our hurricane risk. A lot of the larger, name-brand companies that you and I have known all our lives don’t want to write residential insurance in Florida or property insurance most of any kind, because they don’t want to be involved in that hurricane risk. Knowing the markets that do write insurance, finding the ones that offer the more well-rounded policies and, of course, looking to try to find the best rate for the best coverage is important.

RF:I think one thing that people underestimate a lot is rebuilding costs. In our current market now, we’re over a year out since Hurricane Irma blew through the state and just after Hurricane Michael devastated the Panhandle. Going out and building a home in a normal time is one thing. Going out and repairing or, even worse, having to rebuild a home right after a hurricane is a whole different ball game. The cost of doing so is much higher. So accounting for that extra cost is probably the biggest thing people don’t think about.

JM:As you know, I learned that.

RF:Yes.

JM:The cost of replacing a roof is significantly more than it is if we are outside of a storm window and building supplies and labor supplies are in good parallel with each other.

RF:That’s right.

JM:Then costs-

Pool cages and all that.

RF:Yeah, and pool cages.

Pool cages, yep.

JM:All of that becomes grossly overly expensive-… after a storm.

RF:Not because … I think, I’m sure there were some instances where there might be some gouging out there, but for the most part, it’s just because there’s a lack of materials and a lack of labor, so it just drives, common economics. It just drives the cost up.

JM:When somebody comes to sit down and have a chat with you about a home … Let’s talk waterfront homes, because obviously, we’re on the coast and hurricanes are kind of a double or even triple threat when it comes to insurance because not only do you have to insure against the wind, you have to insure against rising waters also.

RF:Right. Right.

JM:What are some of the ways that people can … What are some of the things they need to look out for when they’re insuring a home if they happen to be on the water down here?

RF:Okay. Well, the first thing in the wind. That’s probably our biggest risk outside of the rising water, as you mentioned. Being sure they have adequate limits of insurance and then deductibles, again, in the country of Florida our deductibles for wind damage, primarily hurricane, are often different than in other states. In most states, they’re a flat dollar amount. In Florida, most of those hurricane deductibles are a percentage, often two to five percent.

JM:How is that percentage determined?

RF:It’s based on the limit of insurance for the home. If you have a million dollar home, a 2% hurricane deductible is $20,000. That’s a lot different than a flat 1,000 or $2,500 deductible.

JM:Absolutely.

RF:So, making the client aware of that, that in the event of the worst-case scenario, major hurricane damage, they’re going to cost share it more than they would for any other type of a loss. That’s something that really we strive to educate our clients about.

JM:Now, you mentioned that the deductible could be a range of two to five percent. Is that an insurance, individual insurance company decision, or is that the homeowner’s decision and it affects the price of the premium?

RF:Well, the answer really is both. It is, ultimately, it’s the client’s decision what they take. We try to offer different amounts and what makes sense. I don’t want to go to a high deductible if I’m only saving a little amount of money. But if it saves a lot of money, it’s worth letting the client make that choice. Following Hurricane Irma, we’ve had more companies come back because of consumer outcry about the high hurricane deductibles and a lot of those companies have come back and started offering flat deductibles for an additional premium. So giving them the range of deductibles is a good idea.

JM:Okay. All right. Well, it’s good to be able to come in and be able to serve the needs or the wants of the community that way. It is nice hearing that some agencies are looking to come back in. I’ve been in Florida for 20 years and I think it was Hurricane George was the first one that I went through-

RF:Okay.

JM:… on my way to Tallahassee for a football game, of all things. After that, there were a number of insurance companies that pulled out.

RF:Right.

JM:One of them happened to be the company I was with, that I had my insurance with at the time.

RF:Not a comfortable situation.

JM:No, it’s not. You’re left scrambling.

RF:Right. It still happens today. Occasionally you get companies that don’t want to continue in a certain area. In the big picture, they look at where their risk is and if they’re overexposed in a certain area, maybe they want to back off that, which is probably good for the consumers overall. Then we’ll find a company to replace that one.

JM:Now, I’m going to go back to hurricane coverage again here because we learned, as you know, full disclosure, Ray happens to be my agent. He has been for a long, long time. We learned by reading our policy after the hurricane that we had all this other coverage that we never even dreamed was available. For instance, our freezer full of fresh meat got completely replaced because there was a rider in there we had no idea about. Those type of riders, are those typical in insurance policies, or are those ones that, when you’re designing a policy for a client, you kind of bundle it together so that you know that they’re insured properly?

RF:Most of the time our philosophy is offer the client most everything that we have-

JM:Okay.

RF:… and let them pick and choose, up to a certain point. There are certain things that we feel are a minimum, like that valuation for the home. We want to insure it for the right value. Most of those extra options are something that we include in the policies. They may seem like superfluous things when you’re looking at a quote sheet, but after you have hurricane damage and you’ve got $1,000 worth of stuff in your refrigerator that’s gone, it becomes important to get reimbursed for that, so we do try to give a very well-rounded policy, at least that offer to start with, and work our way down if the client wants to try to reduce the premium.

JM:Excellent. We were appreciative of that. I’m sure there are a lot of people out there that may not even realize that they have these coverages. If there’s anything I can say, is go back and read your policies and double check what your coverage is, because you may find you have coverage in areas that you weren’t really expecting.

RF:Talk to your agent.

JM:Talk to your agent. They will know it inside and out, for sure. Are there any other thoughts that people really need to consider? One that’s come across my desk a few times in the past month or so is seawall and boat damage due to storms. How do you handle that? Is a seawall considered part of that two to five percent deductible in a hurricane?

RF:Most seawalls are typically uninsurable. There’s not, the major damage is wave and water damage, wave wash, and so forth, tidal changes. That’s something that’s not insurable in a standard policy. I’m frankly not aware of anywhere we can actually get that.

JM:Okay.

RF:I have had claims for seawalls that were covered, things such as vandalism or lighting strikes that do damage to concrete, believe it or not.

JM:Yep.

RF:Docks the same way. Fire, a wooden dock that catches fire. There’s oftentimes coverage for that sort of thing, but the major damage, the wave and water damage, nothing we can really do for the seawall itself. That’s something that someone who lives on the water needs to know about-

JM:Sure.

RF:… so that they understand if something happens, that’s a cost that they’re going to have to bear.

JM:Excellent. Excellent. Now kind of getting off track here for a minute, getting to know you a little bit more personally, if you will, someone comes to you and says you have to clean your room, desk or car, which one are you going to clean first?

RF:Oh, boy. It would be a toss-up between the desk and the car, because the room is definitely last.

JM:It’s a good way of putting it.

RF:It’s probably every other week, one and the other.

JM:Is there anything, any truth that you feel that most people don’t agree with you with?

RF:Don’t agree with me with. Wow. I think probably, if we were to use an insurance example, it’s flood insurance. I really push flood insurance for all my clients, but I have a lot of people that just don’t feel that that’s a big risk for them. I’m hoping that changes now. I just read something in the paper this morning about they estimated a 14 foot surge in the Panhandle. If we had a 14 foot surge here, we’d be-

JM:We’d have water-

RF:… up to our eyeballs right here.

JM:Yeah. We’d have water all the way up to I-75.

RF:That’s right. So I think that’s something that I do have a lot of clients that … We get a lot of people, obviously you know, from other areas of the country where flooding is not even a thought, but it is a big risk and I think that’s something that people need to understand and really something that they don’t always believe me about, but they need to.

JM: Exactly. Excellent. Well, Ray, thank you very much for the time.

RF:Thanks, Jon.

JM:Again, we’ve been chatting with Ray Faubion from McGriff Insurance. You will see his contact information at the bottom of the screen. If you have any questions, please reach out and I guarantee he’d be happy to take your questions. Right?